Overview of shoe franchises in Russia

Out of more than a thousand shoe franchising projects in Russia, there are just over twenty, and in general their conditions are much stricter than those of franchisors in the clothing or accessories segment. Ekaterina Panova, development director of the consulting company StartUp, tells about what these conditions are for various shoe brands.

The retail segment of clothes, shoes and accessories today occupies a large part (48%) of the franchise market. Over the past five years, it has been constantly growing, which attracts representatives of foreign brands: a saturated European fashion market gives an annual increase in turnover in 1-2%, while the Russian one brings about 6-7%. The shoe retail is very competitive and difficult to launch new projects, and, quite logically, it is considered as saturated as possible in terms of product content in various price segments. At the same time, it is very attractive because it has stable demand and a quite stable offer, and its franchised model is one of the most interesting, since large network retailers are increasingly expanding their influence in the regions against the background of gradually disappearing individual shoe stores. And in general, it is not surprising that for the entry into the retail shoe market, even the most experienced entrepreneurs choose not to create their own brand, but to buy a franchise of a famous brand.

Matter of choice

Today, there are more than 1000 franchise projects operating on the Russian market, but it is unlikely that at least half of the truly well-developed ones will be typed. It is extremely difficult to navigate in all this diversity and to choose a truly successful and financially profitable offer, so you need to clearly understand what you should pay attention to when choosing a franchise and how to correctly evaluate the conditions of a particular franchise concept.

Firstly, when choosing a franchise partner, do not rush to find out the financial conditions for buying a franchise. First you need to evaluate your own resources and capabilities. The franchisor who is actively developing in the regions will be primarily interested in million-plus cities, then second-tier cities with a population of 500 000 people. Some franchisors do not even plan to enter cities with a smaller number of people and will not consider candidates from there, since in such cities there may not be shopping centers that provide the necessary patency of the store.

The next task when choosing a franchise is to give the most objective assessment of potential consumers of goods in this segment of retail and determine if there is a market need to open an appropriate enterprise. If the assessment of these indicators is positive, then it is worth assessing the quantity and quality of free retail space in the city as well as its financial capabilities, especially investment in launching and maintaining the project at the initial stage. Only after determining the potential of the city and assessing their own capabilities can you begin to get acquainted with the franchisors and their proposals.

Our strict franchisors

When choosing a shoe franchise, potential franchisees should not make demands on it that are acceptable in the merchandise franchising segment as a whole. After all, shoe retail is built according to its own rules, different from those used by franchisors in retail. For example, shoe companies operating under the franchising scheme include in their offer a lump-sum payment, which is usually not charged by representatives of the clothing market and other brands from the product franchise category. The fact is that the supply of their goods already gives the company enough opportunities to earn money, and against the background of other players in this category, franchisors who charge a lump-sum fee look less attractive, which does not affect the dynamics of their development in the best way. However, unlike their colleagues, shoe franchisors not only charge a lump-sum fee, but also resort to this practice most often after the brand becomes known and in demand on the market (whereas in the clothing segment, with the brand becoming more famous, franchise conditions, on the contrary, soften). This behavior strategy of shoe franchisors, which is unusual for the generally accepted practice of commodity franchising, is determined by the characteristics of the shoe market. Despite a relatively small number of players, it is considered saturated, and the franchise market is even oversaturated, so large franchised shoe retailers can afford to dictate the rules of the game.

It is difficult to call loyal and other conditions for launching a shoe store for franchising, especially when compared with the conditions of other franchises in the product category. Franchisors in the shoe trade segment are in no hurry to give their partners additional benefits: royalties and marketing fees are provided in almost every concept of franchised stores, the costs of registering contractual relations are borne by the franchisee, and, as noted above, a lump-sum payment is made from the partner, although in the fashion segment, brand owners have long learned to earn only on production and supply. High requirements of shoe makers are related to the fact that, despite the dynamically growing demand for shoes from end users, the demand for the purchase of a shoe franchise will never be as massive as the demand for the purchase of a clothing franchise. In the fashion segment of the franchise market, shoe retail will always take third place after the sale of clothing and accessories. And this is quite logical: budget franchises remain the most demanded, and these include organization of corners, island counters and full-fledged boutiques for selling accessories and jewelry. Such stores open in small areas, and the amount of investment required for them is an order of magnitude less than in retail in other sectors of the market. However, some shoe franchisors try to adopt the very best from budget franchises accessories and introduce unique formats that allow the franchise to be classified as inexpensive, and the franchisor to work effectively with regions even in small areas.

To your liking or afford

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Currently, a little more than twenty companies are operating in the domestic business field, offering franchises for their shoe brands. They can be classified in terms of the amount of investment necessary to launch: budget proposals, franchises with an average level of necessary investments and expensive proposals.

The first group of franchisors with relatively budget offers include Crocs (from 10 thousand $), Emtoli (from 20 thousand $), Monarch (from 25 thousand $) and SOHO corner (from 25 thousand $).

Crocs , which is effectively the most affordable franchise in terms of total investment, offers a store format unusual for this market—an "island" store of 5-10 square meters in a shopping center. This offer may be attractive to entrepreneurs who want to start a footwear business but cannot afford the necessary investment. The launch costs for a Crocs "island" start at $10, but the company also offers franchises for full-scale stores in shopping centers or stand-alone buildings, which require a completely different level of investment.

SOHO also offers a budget-friendly option for opening a small island location in a shopping mall or multi-brand store within the SOHO Corner format. The investment (starting from $25) will be slightly higher than the Crocs franchise offer, as TMHF GROUP's products are in the premium price range, and the markup within this franchise reaches 150%, a relatively rare occurrence in footwear retail.

The second group - a franchise with an average investment level - includes Thomas Munz (from $ 75 thousand), Evita (from $ 135 thousand), CORSOCOMO (from $ 115 thousand), W2 Shoes & Accessories (from $ 135 thousand) , Milana (from $ 100 thousand), Tervolina (from $ 150 thousand), Antonio Biaggi (from $ 150 thousand), CCC (from $ 100 thousand), Comforto (from $ 85 thousand), Paolo Conte ( from $ 135 thousand), Zenden (from $ 80 thousand), Obuv.com (from $ 135 thousand), Econika (from $ 100 thousand), SOHO (from $ 135 thousand).

It would be interesting to discuss in more detail the offerings of Comforto, Obuv.com , and the Polish store CCC , all multi-brand formats. Multi-brand shoe stores are currently enjoying clear success among entrepreneurs choosing franchises, and this is especially noticeable compared to the clothing retail sector, where demand is higher for single-brand stores. However, just five years ago, the multi-brand format wasn't widespread even in the footwear segment, as creating and maintaining the correct positioning of such a store concept is much more difficult than with a single-brand store, and large store spaces require a special product selection policy and extremely flexible entry conditions; otherwise, they would seem prohibitive to potential investors. In the Russian footwear segment, most successful multi-brand chains emerged relatively recently—two to three years ago—but they are rapidly expanding and actively expanding into the regions with their own and franchise projects. These formats are only effective in large spaces, so the space requirements are higher than for single-brand stores. For example, Comforto is willing to consider retail space starting from 120 square meters, Obuv.com from 200 square meters, and the Polish multi-brand CCC agrees to terms with premises strictly starting from 300 square meters. Naturally, with increasing space, opening costs also increase, so companies strive to make other franchising terms as favorable as possible for their partners.

The third group of franchises with a high level of investment include Carlo Pazolini (from 250 thousand $), TsentrObuv (from 200 thousand $), Lisette (Rossita) (from 180 thousand $), Mascotte (from 200 thousand $) and ALBA (from 250 thousand $).

For many years, CenterObuv has remained the most attractive and sought-after brand in footwear franchising . This company's store concept is tailored to any regional city, and the store itself can be located in both shopping centers and freestanding buildings—only its size and traffic figures matter. Furthermore, the company operates in the "mid-low" segment, which is attractive to regions with a low standard of living. CenterObuv's regional expansion is particularly rapid: the number of stores already exceeds 1000, and the company continues to consider partnership proposals from potential franchisees. Its success can be attributed not only to its products, which are in demand throughout Russia, but also to its effective management, exemplified by the fact that stores open twice a year—in the fall and spring. Opening a CenterObuv franchise during the off-season is impossible.